A year after filing for his second trip to bankruptcy court, Seadrill announced he expects to be out of the pending proceedings by the end of this week. The company has struggled to meet the terms of the plan agreed with its creditors last fall and approved by the bankruptcy court in October 2021.
Citing the prolonged downturn in the oil market coupled with the impact of the COVID-19 pandemic, Seadrill filed for bankruptcy with most of its affiliates in February 2021. At the time, the company said it had a debt of approximately $7.3 billion. The company previously entered into forbearance agreements with its lenders seeking to further push back maturities of $5.7 billion in bank debt that had been extended to 2022 in the previous bankruptcy action four years earlier.
Under the terms of the new court-approved agreement, a new listed holding company will be established which they intend to list on the Euronext Expand market in Oslo in the second quarter of 2022. The new Seadrill Limited will have approximately 50 million new common shares outstanding, of which only a quarter of one percent (0.25%) will be allocated to existing shareholders of the company, with the lenders controlling the new company. The plan’s goal was to reduce the company’s debt by about $4.9 billion and provide $350 million in new financing.
As part of the reorganization plan, Seadrill has offered to recycle 10 of its vessels from its fleet which had 42 platforms before the filing. In the process, they reported that they had sold two rigs and were recycling five more. The fleet currently has 34 owned vessels, including drillships, jack-up rigs and semi-submersibles. Earlier this week, SFL Corporation announced that it would replace Seadrill with Odfjell Drilling to manage one of the rigs.
Well-known investor John Fredriksen has given up his position with the company as part of the bankruptcy proceedings and a new board and CEO is being appointed. Fredriksen, however, is expected to retain a smaller unsecured bond loan of $50 million which, under certain conditions, could be converted into 5% of the new capital in the future.
Trading in Seadrill’s existing shares on the Oslo Stock Exchange will be suspended after the effective date of the Chapter 11 exit. the main market of the Oslo Stock Exchange, as well as a listing on the New York Stock Exchange.